Premier Foods is to “simplify” its invest for growth programme, after it attracted criticism for asking suppliers for payments to continue doing business with the firm.
Last week, it was revealed that, for the second year, Premier Foods had required suppliers to make an annual investment.
The Federation of Small Businesses said the firm “should be ashamed of themselves” for “demanding a cash gift under the threat of de-listing” and warned many smaller businesses would go bust unless so-called “pay and stay” arrangements were dealt with.
Premier Foods has announced that, having reviewed recent comments, it will simplify the details of its invest for growth programme to a “more conventional type of discount negotiation potentially based on price, value or volume based rebates, or lump sums”.
Gavin Darby, the chief executive, said: “Our invest for growth programme has worked well for us over the last 18 months in allowing us to consolidate our supplier base and invest in innovation, marketing and promotions to support our brands. Many of our suppliers have chosen to invest with us and have grown their business as a result, despite the challenging market environment.
“Most companies look for value from their suppliers and will commonly negotiate discounts or lump sums wherever they can which will be offered and accepted by suppliers if they believe their business will benefit. This is standard business practice.
“The investment payments we have requested from our suppliers are effectively just one form of discount of which there are many different types.
“Over the last few days it has become apparent that this mechanism has been widely misunderstood and misinterpreted. In this situation, we are fully prepared to simplify the details of our future programme.”